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Summary of Significant Accounting Policies:

3 Months Ended

Mar. 31, 2026

Summary of Significant Accounting Policies:

Summary of Significant Accounting Policies:

Note 2 – Summary of Significant Accounting Policies:

Basis of Presentation:

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial reporting and with the instructions to Form 10-Q and Article 10 of Regulation S-X. In the opinion of management, the unaudited condensed consolidated financial statements included herein contain all adjustments necessary to present fairly the Company’s financial position and the results of its operations and cash flows for the interim periods presented. Such adjustments are of a normal recurring nature. The results of operations for the three months ended March 31, 2026 may not be indicative of results for the full year. These unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements and the notes to those statements for the year ended December 31, 2025 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 31, 2026.

Use of Estimates:

The preparation of financial statements in conformity with GAAP requires management to make significant estimates that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of expenses during the reporting period. Management evaluates its estimates on an ongoing basis using historical experience and other factors, including the general economic environment and actions it may take in the future. The Company adjusts such estimates when facts and circumstances dictate. However, these estimates may involve significant uncertainties and judgments and cannot be determined with precision. In addition, these estimates are based on management’s best judgment at a point in time and as such these estimates may ultimately differ from actual results.

Comprehensive Income (Loss)

The Company follows Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 220 in reporting comprehensive income (loss). Comprehensive income (loss) is a more inclusive financial reporting methodology that includes disclosure of certain financial information that historically has not been recognized in the calculation of net income (loss). For the three months ended March 31, 2026 and 2025, the Company had items of other comprehensive income, which are reflected in the accompanying financial statements.

Net Earnings per Share

The Company computes earnings per share using the two-class method. The two-class method of computing earnings per share is an earnings allocation formula that determines earnings per share for Common Stock and any participating securities according to dividends declared (whether paid or unpaid) and participation rights in undistributed earnings. The Series C, Series D and Series E Preferred Shares are considered participating securities as preferred shareholders are entitled to participate with common stockholders on an as-converted basis in any distributions of assets by the Company under the terms of the Certificate of Designations.

The following table illustrates the computation of basic and diluted earnings per share for the three months ended March 31, 2026 and 2025:


		Three Months Ended March 31,
		2026			2025
Net income		$	4,254,392		$	385,169
Less: Preferred stock dividends			(203,384)			(101,403)
Less: allocation of undistributed income to Series C convertible preferred stockholders			—			(115,930)
Less: allocation of undistributed income to Series D convertible preferred stockholders			(103,334)			—
Less: allocation of undistributed income to Series E convertible preferred stockholders			(612,456)			—

Undistributed income available to common stockholders - basic		$	3,335,218		$	167,836
Effect of dilutive instrument on net income			6,000			(112,000)
Undistributed income available to common stockholders - diluted		$	3,341,218		$	55,836

Weighted average shares outstanding - basic			7,481,700			1,385,700

Dilutive effect of warrants and options			217,402			7,181

Weighted average shares outstanding - diluted			7,699,102			1,392,881

Basic earnings per share		$	0.45		$	0.12
Diluted earnings per share		$	0.43		$	0.04

The following potentially dilutive securities have been excluded from the computation of diluted weighted average shares outstanding as they would be anti-dilutive as determined using the treasury stock method for the three months ended March 31, 2026 and 2025, respectively:


	For the Three Months Ended
	March 31,
	2026	2025
Common Stock Options	107,674	32,874
Common Stock Warrants	2,401,556	1,487,223
Total	2,509,230	1,520,097

Cash and Cash Equivalents and Concentration of Credit Risk:

The Company considers all highly liquid cash investments with an original maturity of three months or less when purchased to be cash equivalents. At March 31, 2026, the Company’s cash balances that exceed the current insured amounts under the Federal Deposit Insurance Corporation (“FDIC”) were approximately $0.4 million. In addition, approximately $3.2 million included in cash and cash equivalents were invested in a money market fund and in U.S. treasury bills, and approximately $25.2 million in cryptocurrency, at market value, which is not insured under the FDIC.

Investment in Limited Partnership Interests

As permitted under ASC Topic 825 - Financial Instruments (“ASC 825”), the Company has elected the fair value option for its investment in limited partnership interests which otherwise would be subject to ASC Topic 323 - Investment - Equity Method and Joint Ventures. Pursuant to ASC Topic 820 - Fair Value Measurement, because the investments do not have a readily determinable fair value the Company has elected to use net asset value per share or its equivalent (“NAV”) as a practical expedient to measure the Company’s investment at fair value, unless it is probable that the investment will be sold at a value different from its NAV, so long as the investee entity calculates NAV in a manner consistent with the measurement principles established by ASC Topic 946, Financial Services—Investment Companies. The Company uses the practical expedient and, accordingly, measures its investments at fair value each reporting period based on the NAV reported by the investee entities.

Digital Assets

Effective January 1, 2025, the Company adopted FASB Accounting Standards Update (“ASU”) 2023-08, Intangibles—Goodwill and Other—Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets. Under this guidance, crypto assets within the scope of the ASU are measured at fair value each reporting period, with changes in fair value recognized in net income. The Company’s digital assets, which are comprised solely of $TAO tokens, meet the scope requirements of ASU 2023-08.

TAO tokens are divisible into partial tokens and are presented rounded to the nearest one-hundredth of a token. The following table summarizes the Company’s digital asset holdings as of March 31, 2026:


Assets		Tokens		Cost Basis			Fair Market Value			Unrealized Loss
Staked TAO		59,999		$	20,540,675		$	18,360,832		$	2,681,842
Un-staked TAO		22,211			7,604,030			6,797,065			992,801
Totals		82,210		$	28,144,705		$	25,157,897		$	3,674,643

Segments

The Company currently operates in one segment. The Company has included digital asset operations in its non-segmented corporate activities. See Note 10 - Segment Reporting for further discussion.

Fair Value of Financial Instruments:

The carrying amounts reflected in the balance sheets for prepaid expenses and payables approximate fair value due to the short maturities of these instruments. The carrying amounts for available for sale debt security, warrant liability and derivative liability approximate fair value based on level 3 of the fair value hierarchy. The carrying amounts for digital assets approximate fair value based on level 1 of the fair value hierarchy.

Certain assets and liabilities are carried at fair value under GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy:

Level 1 — Quoted prices in active markets for identical assets or liabilities.

Level 2 — Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable markets.

Level 3 — Unobservable inputs which are supported by little or no market activity and that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques.

BitGo, Inc. (“BitGo”) secures the Company’s digital assets in regulated, insured, cold storage with BitGo Trust Company, Inc. and facilitates the Company’s acquisitions of TAO through its affiliated platforms. BitGo serves as the principal market for the Company’s digital assets, and the fair value of digital assets is primarily determined based on pricing data obtained from BitGo. BitGo is a regulated trust company that provides custody, staking, and trading services for institutional clients and maintains insurance coverage for assets held in cold storage. Management selected BitGo based on its regulatory status, security controls, insurance coverage, and experience providing digital asset solutions to institutional clients.

Accounting for Digital Assets

Fair Market Value

Digital assets are measured at their fair market values using the last close price of the day in the Coordinated Universal Time (UTC) time zone at each reporting period end on the balance sheet. The Company’s digital assets are presented as current assets. The majority of the Company’s digital assets are staked with no lock-up period, and are considered current assets in accordance with ASC 210-10-20, Balance Sheet, due to the Company’s ability to sell them in a liquid marketplace and with a reasonable expectation that they will be realized in cash during the normal operating cycle of our business to support operations if needed.

Cost Basis

The cost basis of the Company’s digital assets is measured at fair value based on the spot price at the time of receipt, consistent with the applicable guidance under ASC 350-60. The Company has elected to adopt the First-In, First-Out (FIFO) method for determining the cost basis of digital assets disposed of. The method assumes that the assets that were acquired first are disposed of first. Realized gains and losses from the disposal of digital assets are included in other income in the Condensed Consolidated Statements of Comprehensive Loss. The Company had no realized gains or losses from the disposal of digital assets for the three months ended March 31, 2026 and 2025.

Revenue Recognition - Digital Assets

The Company engages in network-based smart contracts by staking (or delegating) its digital assets with third party validator nodes. Through these contracts, the Company provides digital assets to stake on a node for the purpose of validating transactions and adding blocks to a respective blockchain network. The term of a smart contract can vary based on the rules of the respective blockchain and can be from immediate to several weeks after it is cancelled (or “un-staked”) by the delegator and requires that the crypto assets staked remain locked up during the duration of the smart contract. The Company stakes its TAO directly from qualified custody with BitGo Trust, enabling a yield generation while maintaining the highest standards of security and regulatory compliance. As of March 31, 2026, the Company’s staked assets have immediate terms, meaning there is no lock-up period upon the asset being un-staked.

In exchange for staking the crypto assets on blockchain networks, the Company is entitled to a fractional share of the fixed digital asset award a third-party validator node receives for successfully validating or adding a block to the blockchain. This award is remitted in the native token of the validator node and is referred to as a staking reward. The Company’s staking reward received from delegating to a third-party validator node is proportionate to the digital assets staked by the Company compared to the total digital assets staked by all delegators to that node at that time. Token rewards earned from staking are calculated and distributed directly to the Company’s digital wallets by the blockchain networks as part of their consensus mechanisms.

The Company considers the provision of staking services to be an output of the Company’s ordinary activities and accounts for staking rewards under ASC 606. Each separate validation under a smart contract with a network represents a performance obligation. The satisfaction of the performance obligation for processing and validating blockchain transactions occurs at a point in time when confirmation is received from the network indicating that the validation is complete, and the awards are available for transfer. At that point, the fair value of the staking reward is recognized and recorded as revenue. Staking rewards are non-cash consideration and are measured at fair value at the time control is obtained, using quoted market prices of the underlying digital asset The Company presents staking revenue on a gross basis as it has determined it is acting as a principal in the transaction, as it controls the validation services prior to transfer of the rewards. Once the reward has been acquired by the Company, the tokens are added to the Company’s digital asset holdings and their fair value is accounted for in accordance with ASC 820.

Fixed Assets and Leases:

The Company has one lease which has a remaining term of three months during the reporting period. The Company has deemed the lease immaterial and has not recorded it as an obligation on the balance sheet nor a right-of-use asset. The total remaining future expense relating to this lease is approximately $18,000.

Fixed assets are stated at cost less accumulated depreciation. Depreciation is computed on a straight line basis over the estimated useful life of the asset, which is deemed to be between three and ten years.

Research and Development Costs:

All research and development costs, including costs to maintain or expand the Company’s patent portfolio licensed from CRE are expensed when incurred. Non-refundable advance payments for research and development are capitalized because the right to receive those services represents an economic benefit. Such capitalized advances will be expensed when the services occur and the economic benefit is realized. There were no capitalized research and development services at March 31, 2026 and December 31, 2025.

Income Taxes:

There is no income tax benefit for the losses for the three months ended March 31, 2026 since management has determined certain US GAAP income recognized items are not currently subject to income taxes, but rather are deferred until a future event.

The Company’s policy is to record interest and penalties associated with unrecognized tax benefits as additional income taxes in the statement of operations. As of January 1, 2025, the Company had no unrecognized tax benefits, or any tax related interest or penalties, and it does not expect significant changes in the amount of unrecognized tax benefits to occur within the next twelve months. There were no changes in the Company’s unrecognized tax benefits during the three month period ended March 31, 2026. The Company did not recognize any interest or penalties during 2025 related to unrecognized tax benefits.

With few exceptions, the U.S. and state income tax returns filed for the tax years ending on December 31, 2022 and thereafter are subject to examination by the relevant taxing authorities. Net operating loss (“NOL”) carryforwards are subject to examination in the year they are utilized regardless of whether the tax year in which they are generated has been closed by the statute. The amount subject to disallowance is limited to the NOL utilized. Accordingly, the Company may be subject to examination for prior NOLs generated as such NOLs are utilized.

Recently Issued Accounting Pronouncements:

In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses (Topic 220), which requires disclosure in the notes to financial statements about specific types of expenses included in the expense captions presented on the face of the statement of operations. The requirements of the ASU are effective for annual periods beginning after December 15, 2026, and for interim periods beginning after December 15, 2027, with early adoption permitted. The requirements will be applied prospectively with the option for retrospective application. The Company is currently evaluating the impact related to the adoption of ASU 2024-03 on its consolidated financial statement disclosures.